Decreasing the Reserve Requirement Ratio Is

question 198

Multiple Choice

Decreasing the reserve requirement ratio is

• A) a contractionary policy because it lowers the amount of total reserves in the banking system.
• B) a contractionary policy because it lowers the amount of excess reserves in the banking system.
• C) an expansionary policy because it raises the amount of excess reserves in the banking system.
• D) an expansionary policy because it raises the amount of required reserves in the banking system.

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue to form a judgment.

Analytical

Relating to or using analysis or logical reasoning to address a problem or dissect a concept.

Evaluative

Concerned with assessing or judging the value, significance, or condition of something.

Positive Critical Thinking

The practice of engaging in reflective and independent thinking in a constructive or optimistic manner.